In Wake of Apple Loss, Imagination Technologies Puts Itself Up for Sale

Posted onJune 26, 2017June 26, 2017

Earlier this April, Imagination Technologies announced that it would no longer provide key graphics IP to Apple within 15 to 24 months (July 2018 to April 2019). The announcement sent the company’s stock plunging, and Imagination soon announced that it would seek to sell off at least two business segments: MIPS, its low power and embedded microprocessor division; and Ensigma, its low-power wireless division. The plan, at least initially, was to double down on its core graphics business, which has produced the bulk of the company’s revenue in recent years.

Now it seems plans to break the company up and sell it piecemeal have themselves been canceled. Imagination announced Thursday that “[O]ver the last few weeks it has received interest from a number of parties for a potential acquisition of the whole Group. The Board of Imagination has therefore decided to initiate a formal sale process for the Group and is engaged in preliminary discussions with potential bidders.”

Separately, however, it notes that negotiations for sales of the MIPS and Ensigma lines are still ongoing. That seems to suggest that what Imagination considers the whole Group is its PowerVR business, and not much else. If there’s anything surprising about this, it’s how far Imagination has fallen in a relatively short period of time. It’s not just a question of losing Apple’s business; Apple has apparently been building its own GPU cores for rather longer than anyone realized (or at least, longer than anyone realized before last year).

There was a time, back in Q1 2012, when Jon Peddie Research noted that Imagination Technology had a larger share of the mobile graphics market then every other GPU IP-providing company combined. Today, it’s a ghost of its former self. So what happened?

GPU Market Share Q4 2011 — Data by JPR

In one word: ARM.

One point of clarification we need to make, or else the graph we’re about to show won’t make much sense. JPR’s comments about Imagination’s market share in Q1 2012 were comparing the company with other IP developers that provided GPU-specific IP, not companies like Qualcomm, which have an integrated SoC and obviously use their own GPU IP for graphics processing. As the slide below shows, however, Imagination was still a potent contender, even compared with Qualcomm.

Market share by total number of design wins

I have no idea why the graph author used two virtually identical shades of blue for the same graph, but it’s the taller line that represents Imagination Technology’s design wins. While this graph only runs through the end of 2013, the trend is clear: ARM began shipping its own Mali line of GPUs, and Imagination Technologies’ design wins started to tank.

It’s not hard to see why, either. What do Qualcomm, Nvidia, and Apple all have in common? They sell (or in Nvidia’s case, sold) SoCs into the tablet and smartphone space with integrated GPUs. Imagination Technologies had a good GPU core and multi-year licensing deals with companies like Intel and Apple, but Intel eventually rolled its own graphics core, ARM debuted a GPU that it could sell you right alongside a bog standard Cortex-class CPU, and Qualcomm bought and developed Adreno off of AMD.

Imagination, to its credit, did see the writing on the wall, but they didn’t see it quickly enough. IT bought MIPS on February 8, 2013, before ARM had begun to eat a serious slice of its own market share. The problem was, by that point the industry had already standardized on ARM for mobile devices. I know there’ve been a few MIPS-powered Android products, though I’m not sure if any of them ever made it to the states. But both Imagination and Intel ran into serious problems trying to build an Android ecosystem around an alternative CPU architecture.

Imagination Technologies probably will find a buyer, given the company’s years of expertise in GPU design and its existing customer base, but who and what that will be is anyone’s guess. The company has announced it will continue to pursue legal action against Apple over alleged infringement of Imagination’s IP — the simplest way for Apple to make that particular problem go away might be to buy IT outright.